Kenny Rogers sues EMI over digital royalties

Well, it’s nice to be invited to a party, isn’t it? And EMI has just been invited to the digital royalties dispute party, via a lawsuit from Kenny Rogers. What fun.

As previously reported, the digital royalties dispute currently rocking the US record industry revolves around whether download revenue should be treated as record sales or licensing income (there are arguments for both interpretations). It’s an important distinction, because many pre-internet record contracts, which obviously don’t specifically mention downloads, pay out a considerably higher royalty to artists if revenue comes in from licensing deals rather than record sales.

Record companies have always treated download sales as the digital equivalent to record sales and paid heritage artists the smaller royalty. But many of those artists aren’t happy with that situation. Early efforts to fight that interpretation in the American courts, however, were not successful, but things changed when FBT Productions, who have a stake in the early Eminem recordings, successfully sued Universal Music for the higher pay out on download sales.

Universal insists the ruling in the FBT case only relates to that specific contract, and does not set a more general precedent. But that hasn’t stopped Rob Zombie, Chuck D and the estate of Rick James from suing the major over their old record contracts. Earlier this month Sister Sledge pulled Warner Music into the dispute by suing over their digital pay outs, and now Kenny Rogers wants the courts to force EMI to pay the higher royalty on his download sales. That only leaves Sony Music out of the proceedings, though interestingly it was Sony which successfully fought off some of the earlier lawsuits in this domain, led by the Allman Brothers and Cheap Trick.

Rogers is the first to file his digital royalties lawsuit in the Tennessee Court, which, of course, will be more convenient for those artists whose music industry base is Nashville, should Rogers be successful. Major label lawyers remain confident that – while certain contracts may enable certain artists to get a higher pay out on downloads – there will be no general ruling on this issue, and in most cases their interpretation of what constitutes record sale and licensing income will prevail. But if the heritage artists win, the impact could be huge on the labels, with the Future Of Music Coalition estimating the majors might have to hand over $2 billion in extra royalties if they lose outright.

It’s worth noting that Rogers’ lawsuit isn’t just restricted to a disagreement on digital revenue, with other complaints also included, stemming from a number of royalty disputes that seem to have been rumbling on since 2007.